The Tories are on course to become the higher tax party

George Osborne has said he will cut taxes for the middle class Photo: GETTY IMAGES

The Quad meets today, and again later this week, to finalise the Budget. I am assured that there are no big rows or outstanding issues (though at the weekend there was briefing around that they are arguing over the tax threshold). What's clear though is that beyond the Budget, tax policy is up for grabs, and that the Tories are undergoing a slow-motion conversion to a new model that endorses the idea of sparing the poor, whacking the wealthy, and arguing over how much to fleece those in the middle.

The most troubling read for any Conservative this morning has to be David Skelton's provocative – and to my mind dangerous – suggestion that the 45p rate should be institutionalised as the new top rate. I have said before that the Tories are not doing enough to reverse the insidious drift to a new income tax structure that seeks to treat the 40p rate as the new normal – the new standard rate if you will – with millions more dragged into its grasp. In fact, David lays out the damning stats in his terrific (if wrong, wrong, wrong) piece for the Telegraph today: 1.7m paid at 40p in 1993/94, and now it's 4.4m (and the total will rise again). The Skelton plan, on behalf of his group Renewal, is to scrap the 40p rate altogether and "start the 45p rate at a much higher level of income".

By that of course he means that 45p would be enshrined as the new higher rate, but would start at £62,000 – the "much higher level of income". At a stroke it would put two million people back on the real standard rate, where they should be. But Mr Skelton, to my mind, is looking through the wrong end of the telescope. Because of course what he means is that he wants to start the 45p rate of tax – the one Tories used to oppose outright – at a much lower level of income. At the moment it kicks in on all income above £150,000, but he wants it to be permanent, and to apply to those earning £62,000 or more.

His piece contains assertions which should grate on Conservative ears. For example: "As ever in taxation, someone has to pay and it is those who are very well off who will do so, meaning that the proposal is fiscally neutral." But why should it be that someone "has to pay", wealthy or otherwise? And: "Under our proposals, the very richest would pay a little more…" Again, why? This idea, he argues, has the makings of "a Workers' Budget from a Workers' Party". This is what we might describe as the Halfonisation of the Tory party, a strand of thought championed effectively by the Harlow MP that is gaining ground.

For Conservatives this is a big moment. Mr Skelton, Mr Halfon and others are shaping and winning an argument that legitimises higher taxes on the wealthy and then seeks to redefine the idea of wealth to take in more and more people, while simultaneously accepting the Lib Dem argument to take more and more people out of tax altogether at the bottom of the income scale. It encourages the idea that more tax should be paid by fewer people. Intellectually it may have its attractions, because it simplifies the system. In practical terms the rise in wealth inequalities invites these kind of punitive solutions. Politically, it can be presented as helping the Tories address the populist threat of Labour and Ukip by siding with the common man against the wealthy metropolitan elite the Tories now claim to despise. But boy, is it ever a long way from the the Lawsonian model of ensuring everyone has a stake in the system and in "a penny off the rate", or the Thatcher/Blair consensus that 40p is as far as it is prudent to go.